The COVID-19 coronavirus pandemic caused havoc in the world’s economy, including here in Florida. Mandatory closure orders meant that many small and larger businesses would not survive if they needed to shut down for a substantial period. And all of the business’s employees would lose their jobs unless something was done to prevent this and reduce the effects of this economic catastrophe.
The U.S. government responded by enacting the Coronavirus Aid, Relief, and Economic Security (CARES) Act which included within it the Paycheck Protection Plan, or PPP. The PPP program was designed to provide needed financial support in the form of loans to qualifying companies who could provide evidence of their usual income and how many employees they would continue to employ if they were granted loans. The PPP plan even promised to forgive the loans if employers kept their employees on the payroll.
Learn More> How Businesses Can Respond to PPP Loan Fraud Investigations
More Than $100 Billion in Fraudulent PPP Loans
The PPP loan program distributed roughly $800 billion to those businesses that filed applications with estimates of fraudulent loans totaling far above $100 billion. As you might guess, the Department of Justice is now committing large amounts of resources to identify people who filed fraudulent loan applications or who violated the law by using the funds for unauthorized purposes. Thousands of people who received loans filed loan applications in the name of nonexistent companies with nonexistent employees.
The PPP program did not include any penalty clause for violating the program’s terms, but there are plenty of preexisting federal criminal statutes that are being used to charge thousands of people with serious federal criminal offenses.
In this blog, we’ll cover the most common federal crimes being charged by the Department of Justice and what possible penalties someone convicted of one of these crimes could be facing:
Bank Fraud Penalty = Up to 30 years in federal prison and a $1 million fine
A person might be convicted of bank fraud if they knowingly execute or attempt to execute, a scheme
1) to defraud a financial institution; or
2) to obtain any of the money, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.
Wire Fraud Penalty = Up to 20 years in federal prison and statutory fines
This criminal law prohibits the use of the Internet in connection with, “any scheme or artifice to defraud, or . . . obtaining money or property by means of false or fraudulent pretenses, representations, or promises.”
Making False Statements to the SBA Penalty = Up to 30 years and a $1 million fine
This federal crime charge can lead to a conviction if a person knowingly provides a false statement to the Small Business Administration for the purpose of influencing its actions in any way. This extraordinarily broadly written statute can be used in a wide range of circumstances and can result in severe consequences for someone who did not appreciate the gravity of their actions.
False Statements to an FDIC-Insured Bank Penalty Up to 30 years in federal prison and a $1 million fine
Like the false statements to the SBA, any knowingly false statement made to any FDIC-insured bank (which is virtually all the banks from which PPP money was issued) can lead to a conviction.
Aggravated Identity Theft Penalty = Up to 2 years prison served consecutively to other sentences
This federal crime is committed when a person knowingly transfers, possesses, or uses, without lawful authority, the identification information of another person in connection with the commission of certain specified felony offenses. This is exactly what many federal defendants are now facing because they are accused of filing PPP loan applications using the names of businesses they didn’t own and the names of real business owners.
Tax Evasion Penalty = Up to 5 years in prison and fines of $100,000 (for people) or $500,000 (for corporations)
Tax evasion can be committed by a PPP loan applicant who obtained money through any one of the previous criminal means and didn’t report the money as income to the IRS. A person who takes money illegally is not likely to then declare the funds as income, but they are legally required to do so. Others may have evaded taxes illegally by falsely stating payroll taxes or failing to report other taxable transactions related to the PPP loan they received.
Making False Statements to Federal Agents Penalty = Up to 5 years in prison and statutory fines
The Department of Justice could prosecute any person who, “falsifies, conceals, or covers up by any trick, scheme, or device a material fact; . . . or who makes any materially false, fictitious, or fraudulent statement or representation; or . . . makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry,” during a federal investigation. This is one of the most common federal crimes because so many people attempt to lie to federal agents in an attempt to escape trouble. Ironically, the lie is often what gets prosecuted, not the crime for which they were being investigated.
Conspiracy Penalty = Up to 5 years in prison and fines, or the same penalty as the underlying crime
People unfamiliar with the law are often surprised to learn that “conspiracy” to commit a crime usually carries the same penalty as the underlying crime they were conspiring to commit, but no more than a top sentence. In federal law, conspiracy can be charged when two or more parties enter into a plan to commit acts violating federal law and one of them performs an overt act in furtherance of the crime. For example, if one of the parties cases a bank before a robbery will complete the crime of conspiracy even if no robbery ever takes place. The defendants need not know what coconspirators are doing, nor do they even need to know who all of the coconspirators are.
Attempt Penalty = Same penalties as the underlying offense
The law does not reward people who attempt to commit a crime but fail to complete the crime. You don’t get points for missing your target.
Learn More > Florida PPP Loan Fraud Defense
Consult Only With Experienced Federal Criminal Defense Lawyers for Your Case
Each of these PPP-related crimes requires the government prosecutors to prove every element of the offense beyond a reasonable doubt. Every such case includes some evidence that is weaker than other evidence, witnesses who have dirty hands themselves, or a gap in the paperwork needed to prove the crime. Only the most experienced criminal defense lawyers know how to exploit every opportunity for their client’s benefit. Don’t take any chances with your freedom if you are facing PPP fraud charges.
Call Tampa’s experienced Federal criminal defense lawyers at Stechschulte Nell today; 813-280-1244.
